1099 R reporting of silver bullion from IRA?

[JudyB]

My client received 1099-R for IRA distribution of silver bullion.

nothing was sold, she withdrew it .   I have reviewed the form 5329 to see if there are any special bullion rules as to this and looked at many IRS articles (maybe not the right one] She put her own investment into IRA, the basis of her silver has gone up. They are saying that the full amount is taxable. 
client states that this is not realized, was not a sale, and was told she should have no tax as it is not a retirement withdrawal ???  Not sure what to make of this and where to research, other than asking client where she got the information. 

any suggestions.    Thanks in advance as always.

judy

[sjrcpa]

Taking something out of the IRA-cash or property- is a distribution. It is taxable to the same extent a cash distribution would be. And the amount of the distribution is the value of the property at the time of distribution.

[IRonMaN]

Yup, whether she got paid in silver or chickens, she made a withdrawal.  I would assume the 1099R shows an amount equal to the value of the silver on the date she pulled it out?

[TaxMonkey]

Just to be clear on your facts.  The taxpayer had physical silver bullion on deposit with a trustee.  She then moved the silver from the trustee to her personal possession.  The trustee issued her a 1099-R for sending (distributing) her the silver.

What does "She per her own investment into the IRA" mean.  It would truly be unusual if she put some else's investment into her IRA.  Are you trying to say that she made a non deductible contribution to her IRA?

What do you mean by "the basis of her silver has gone up"? I cannot imagine how that could happen.  Did you mean the the value of the silver has gone up?

"They are saying that the full amount is taxable" By they, I assume you mean the IRA trustee is reporting on the 1099-R that it is fully taxable.  I would not expect an IRA trustee to know if a taxpayer made a non deductible contribution to an IRA.

Distributions from an IRA are not required to be "realized" as in sold in order to be taxable.  Merely having unfettered access is enough.

Here is an article that seems relevant to your question:

https://www.thetaxadviser.com/issues/2022/feb/taking-possession-coins-irs-taxable-distribution.html

[PATAX]

@TaxMonkey you raised some good points there and it sounds like you have done your research. I would venture to say that this is a fairly rare event, and most tax preparers probably have never encountered it.. oh by the way, you may want to change your avatar if you can. It looks like an angry Herman Munster😉

[BobKamman]

@IRonMaN But, but, she "was told she should have no tax."  Doesn't that count for something?  Especially, since the source is not identified, it might have been the Voice of God.  

[IRonMaN]

I’m going to guess that the voice belonged to one of the 19 names that popped up in Georgia this week.  They found out that giving out bad tax advice is safer than giving out bad election advice.